Embed Size (px)
Citation preview
11 www.irishfunds.ie18 August 2016
Irish Funds Singapore Seminar 2016
Hosted by:
www.irishfunds.ie
Mr. Ross Church
Deputy Head of Mission, Irish Embassy Singapore
Mr. Pat Lardner
Chief Executive, Irish Funds
Welcome remarks
www.irishfunds.ie
Who/what we are….
• industry association for all aspects of regulated cross border funds
in Ireland
– representative function
– promotional function
• 113 member firms, located both in and outside Ireland
• key link to the authorities & policy makers in Ireland and beyond
• the industry’s representative in Europe and globally
• a platform for collaboration, information sharing and driving
outcomes & improvement
www.irishfunds.ie
The Irish funds industry
• supports managers from all over the world
• full range of services for Irish domiciled
funds as well as providing expert services
for funds domiciled outside of Ireland
• solutions are provided to managers
across the full spectrum of investment
strategies
Fund Manager
Irish Administered
Funds
Irish Domiciled Funds
UCITS
AIFs
Non Domiciled Funds
www.irishfunds.ie
www.irishfunds.ie
Long track record of delivery
Total Assets under Administration, Euro billions
Source: Central Bank of Ireland and Irish Funds
www.irishfunds.ie
Scale, Diversity and Momentum to support you
Irish Domiciled Funds – Product BreakdownEuro billions
Source: Central Bank of Ireland and Irish Funds
www.irishfunds.ie
Mr. Gerard Whitty
Director, IDA Ireland ASEAN and Taiwan
Ireland and Southeast Asia
in Partnership
Gerard Whitty, Director, ASEAN & Taiwan
IDA Ireland, Singapore Office
Ireland:
Recent Economic Performance
Financial Services Success Stories
& IFS2020 Launch
• Ireland’s economy grew 7.8% in 2015 - 5 times faster than the EuroArea average & entered its 5th
consecutive year of economic expansion in 2016; GDP up 2.3% in Q1 2016.
• Forecast to be the fastest growing economy in the EU in 2016 (EU, IMF, OECD).
• Significant job growth over the last 4 years: unemployment rate at 7.8% (May 2016), down from a peak of 15.2% in January 2012.
• 2015 was a record year for FDI with 213 projects won - a net increase of 12,000 jobs created by IDA Ireland client companies.
• Budget deficit of 2.3% for 2015: well below EU limit of 3%.
• Irish Govt. debt has an A grade investor rating with all major Ratings agencies**.
Fastest Growing Advanced Economy in the World
Sources: IMF World,OECD Economic Survey of Ireland 2015, European Commission *Department of Finance, 2016 Spring 2016 Economic Forecasts **Standard & Poor's, Fitch, Moody's, DBRS, R&I
0%
2%
4%
6%
8%
10%
2012 2013 2014 2015 2016* 2017*
Real GDP Growth
Ireland’s economy remains strong in the face of BREXIT
• Ireland will continue to be a core member of the EU single market and Euro currency.
• Rating agency S&P maintained Ireland’s A credit rating noting that they “expect the Irish economy to stay resilient enough to withstand the negative impact of the Brexit”.
• The prudent economic and fiscal policies implemented over recent years have placed Ireland in a stronger position to weather any negative spill-over from a UK downturn:
Competitiveness has improved significantly;Employment has increased significantly, and unemployment has fallen - 7.8% in June 2016;Our debt ratio has fallen from 120% in 2012 to 79% in 2015.
• The Irish Government is implementing its Capital Investment Programme, rapidly expanding the capacity of the economy in areas such as infrastructure, commercial real estate and housing.
Department of Finance Summer Economic StatementSee Programme for Govt.in special interest topics for more detail Capital Investment Programme
H1 2016 +10% v 2015 which was a record year110 FDI investment projects creating 9,000 jobs; 10% up on H1 2015.
• The International Financial Services (IFS) sector has been an important feature of Ireland's economy for over 30 years.
• 400+ Companies employing over 38,000 people.
• 17 of the top 20 global banks have business operations in Ireland.
• 40% of the world’s Hedge Funds serviced from Ireland.
• No. 1 location in Europe for cross border life, non-life and reinsurance activities.
• Global leader in aviation leasing (over 40% of all commercial leased aircraft are leased or managed out of Ireland).
• Growing international payments cluster with over 45 companies
• Leading financial technology location in Europe. Along with the UK, Ireland captures most of the FinTech venture investment in Europe.
Developed International Financial Services Sector
Banking
Investment
Management
Insurance
Successful Track record in attracting major global players
Recent Announcements from IFS Companies
IFS2020: A Strategy for Ireland’s International Financial Services Industry
• Irish Government’s vision for the future for IFS.
• Presents a five year strategy to further develop Ireland as a global
leader in this sector.
• Grow the level of direct employment in the IFS sector from 35,000 to
45,000 by 2020.
• Sets out five strategic priorities with 30 actions to be implemented:
1. Promote Ireland as a location for international financial services
2. Improve operating environment & competitiveness of Ireland's
IFS sector
3. Drive research, innovation & entrepreneurship in IFS sector
4. Develop emerging IFS sub-sector
5. Establish Implementation Framework for IFS2020
www.ifsireland.com
IFS2020: A Strategy for Ireland’s International Financial Services Industry
IFS2020: A Strategy for Ireland’s International Financial Services Industry
IFS2020 & European Financial Forum: Singapore Events
Mr. Eoghan Murphy T.D. Minister of State for Financial Services,
eGovernment and Public Procurement at the Departments of Finance
Visiting Singapore on
Wednesday, 21st September 2016
Business Breakfast @ Fullerton Hotel (8am – 9.30am)
Public Lecture @ NUS, Centre of Banking and Finance Law, (3pm – 4.30pm)
www.irishfunds.ie
Brexit: Beyond the Referendum on EU Membership
Mr. Pat Lardner
Chief Executive, Irish Funds
www.irishfunds.iewww.irishfunds.ie
Managers’ needs pre/post vote have not changed
Objective to grow/scale their businesses cross-border by
accessing passports for products and services
Effective EU based national regulatory and taxation regimes are
vital enablers
Expert knowledge/skills across a range of providers covering the
full breadth of investment strategies/asset classes very
important
Being able to conduct business efficiently is expected
(language, legal system, service culture, cost)
Ireland has done this very successfully for over 20 years
www.irishfunds.ie
Why Ireland?
Distribution and investor support
Source: Lipper, PwC & Irish Funds, 2015
• broad mix of institutional and retail clients
• 30 languages supported
• 23 currencies supported
Global Distribution of Irish Funds: 70 countries
24%
22%
20%
18%
17%
United Kingdom Germany
France Switzerland
Netherlands
Sales Registration: Top 5 Markets for Irish UCITS
Source: Lipper, PwC & Irish Funds, 2015
www.irishfunds.ie
UK Referendum & “Brexit”
• The outcome was a surprise to most
• Things which are certain/clear:• Ireland remains a committed member of the EU
• Irish domiciled funds’ access to the EU single market unchanged
• UK remains a member of the EU for the foreseeable future
• Big questions to which there are not yet clear answers• UK’s status at the end of the process?
• When will the process start?
• How long will the process last?
• Questions we are being asked by managers - how can they work with
Ireland to retain access to the EU in providing?:• Direct portfolio management services
• Funds
• Our members are helping managers and providing solutions
www.irishfunds.iewww.irishfunds.ie
Assumption risk
Assumption/
Noise
Reality Impact
Pre
Referendum
Will be close but UK will
vote to remain in
Narrow vote to leave Most entities
unprepared
Post
Referendum
Article 50 notification
will happen very quickly
Seems to be moving
further away
Pre-exit period will
be very lengthy
Passports and access
remain unchanged until
the UK actually leaves
so little to do right now
Depends on strategies
you manage/delivery
mechanisms/target
market(s), your
business model
and what clients want
Staying informed
important to know
where you need to act
now and to minimise
future assumption risk
UK won’t implement EU
regulations going
forward
Still full EU members
and part of ESMA
Equivalence as a 3rd
Country highly relevant
Too early to tell
www.irishfunds.iewww.irishfunds.ie
Key Focus Areas
• UCITS
– Product based passport linked to EU domicile
– No equivalence or 3rd Country rules
– Pre-existing routes remain open to Asian managers
• AIFMD
– Two passports (management & marketing) – linked to manager
– Passport (EU AIFMs) & Private Placement (NonEU AIFMs) co-exist at present
– 3rd Country access, equivalence still a work-in-progress which complicates matters
• MiFID
– Passporting rights attach to EU based firms
– Which services/clients are UK based MiFID entity working with?
– MiFID2 on the way – again take care
www.irishfunds.iewww.irishfunds.ie
Our activity since the vote
• Engage with Irish government, regulator, agencies
– Funds industry high on the agenda
– Ireland ready and able to provide help to those who need it
• Alongside our 38 Working Groups we are breaking the “big” question into a
number of smaller ones
– Identifying/working through positions which may arise in the negotiations
– Develop specific communication and information aids
– Engage with EU colleagues
• Meeting with our members / handling inbound enquiry
• Speak to other stakeholders / peers
– Listening & acting responsibly
• Ensure we can assist managers irrespective of their starting point
www.irishfunds.iewww.irishfunds.ie
Some things we are seeing post the vote/more recently
• Management Companies (ManCos)
– UCITS: interest in establishing Irish UCITS ManCos to ensure EU
access continues irrespective of outcome (product holds the passport)
– AIFMs: UK AIFMs looking to preserve EU marketing access considering
establishing an Irish AIFM, appointing an Irish AIFM or using a platform
• European clients/segregated mandate solutions under MiFID
– a potential question where EU based client wants to contract with an EU
based provider of services
• Offerings aimed at pension fund investors in multiple jurisdictions
– Preserving tax transparency important - more inbound enquiry on the
Irish Common Contractual Fund (CCF)
– Irish CCF Master/Local Feeders in both EU and non-EU markets
• Solvency II related
– More onerous liquidity requirements impacts how collateral provided
– Can funds/fund units play a part?
www.irishfunds.ie
Irish Domiciled Funds: AIFsQualifying Investor Alternative Investment Funds (QIAIFs)
QIAIFs Net Assets and Number of Funds
Source: Central Bank of Ireland
www.irishfunds.ie
Other local developments……….
• Updating of Ireland’s Investment Limited Partnership Legislation
• Approved by Irish Government / legislation being worked on at present
• Will provide additional scope for private equity and real asset funds
• ESMA advice on possible extension of the AIFMD passport
• published on 19 July 2016
• no significant obstacles impeding application of the AIFMD passport to
Singapore
• will now be considered by the European Commission, Parliament and
Council
• EU Capital Markets Union
• Call for evidence submissions completed in January 2016
• We have subsequently met with the European Commission
• Project will continue despite UK position
www.irishfunds.ie
What does the industry in Ireland provide?
• EU Single Market Access: product & service passports
• Investor Access: European Market and beyond
• Service Excellence
• Low Costs
• Low Tax Environment
• Regulatory Environment
• Commitment from Government
• Infrastructure : language/legal/telecommunications
7thIMD WORLD
COMPETITIVENESS
2016 YEARBOOK
1st
FLEXIBILITY AND
ADAPTABILITY OF
PEOPLE
1st
IN EUROPE FOR
COMPLETION OF
3RD LEVEL EDUCATION
www.irishfunds.ie
Brexit: The Dynamics and Challenges - A Practical
ASEAN Perspective
• Mr. Paul Moloney, Consultant, Eversheds
• Mr. Tony Lewis, Area Head, HSBC Securities Services, Singapore
• Mr. Bill Jamieson, Partner, Colin Ng & Partners LLP
• Ms. Yoon Ng, Director, Spence Johnson
Moderator
Panelists
www.irishfunds.ie
Mr. Armin Choksey
Director, PwC Singapore
Asian Passports Coming of Age
PwC 33
Hong Kong and Mainland Mutual
Recognition of Funds
Status:Live 1 July 2015
Countries in scope:China and Hong Kong
Status:Live 25 August 2014
Countries in scope:Malaysia, Singapore and Thailand
ASEAN CIS
Status:MOC signed in April 2016 -18 months from June 2016 to full implementation
Countries in scope:Australia, Japan, New Zealand and South Korea
Asia Region FundPassport
Asian Fund Passports – Overview
PwC
Who are joining? … and who’s next?
New Zealand
South KoreaPhilippines
Japan
Thailand
Singapore
Australia
34
PwC
Removal of tax discrimination
Tax discrimination at investor level
is the key to its success
Non-resident investors
35
Example of discriminatory tax outcomes
Fund income 100
Tax cost nil
Distributed to investors 100
Fund income 100
Tax cost 15
Distributed toinvestors 85
Both funds receive the same distribution of 100 from underlying investments
Resident investors
Resident Fund
Resident Fund
Distributed to = investor 85
(Exempt at fund level)
Fund income 100Tax cost nilDistributed to investors 100
(Exempt at fund level)
Fund income 100Tax cost 15Distributed toinvestors 85
Distributed to = investor 100
Resident Fund
Non-resident
Fund
Resident Fund
PwC 36
Developmentof Asia Pacific mutual funds AuM
* Australia, China, Hong Kong, India, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand
Source: PwC analysis based on ICI and local fund associations data
** CAGR : Compound Annual Growth Rate during the period
20103,263
Jun-20154,510
Total AuM* in USD bn
CAGR** : 7.5%
PwC
Developmentof Asia Pacific mutual funds AuMARFP
37
New Zealand
South Korea
Japan
Singapore
Australia
Source: PwC analysis based on ICI and local fund associations data
** CAGR : Compound Annual Growth Rate during the period
2014
2,869
2020
4,296
Total AuM* in USD bn
CAGR** : 7.0%
2007
2,328
CAGR** : 3.0%
Thailand
Philippines
PwC 38
Source: PwC analysis based on ICI and local fund associations data
** CAGR : Compound Annual Growth Rate during the period
Development of Asia Pacific mutual funds AuMASEAN CIS
SingaporeMalaysia
Thailand
2014
226
2020
372
Total AuM* in USD bn
CAGR** : 8.6%
2007
124
CAGR** : 8.9%
PwC
No performance fees No repo or SEC lending Limit on delegation
ASEAN CIS – Key principles
39
Approved for retail offer in home country
Legal structures approved for CIS offered to retail investors (i.e. Authorised scheme approved by MAS)
Common standards imposed on Qualifying Manager, Trustee and CIS
Qualifying CIS Operator (locally regulated)
• Track record (5 years, US$500m global AUM)
• At least US$1m capital• Competency & experience• Delegation restrictions
Qualifying CIS(locally domiciled)
• No performance fees• Transferable securities• Investments into other
funds permitted• Limits on derivatives
Annual compliance auditAnnual audit of the CIS Operator covering, at a minimum, compliance with the Common Standards
Appoint local distributors and local representatives
• Use of locally licensed intermediaries in host country• May need to appoint a local representative• Subject to host country requirements on offer of CIS
PwC 40
The Securities and Futures Commission in Hong Kong (“SFC”) and the China SecuritiesRegulatory Commission in China (“CSRC”) jointly launched the Mutual Recognition of Fundsscheme which has become effective since 1 July 2015. The scheme allows eligible funds to bedistributed in each other’s market through a streamlined vetting process.
Hong Kong China
Total AUM (including
locally domiciled mutual
funds only)
US$60 billion RMB5,241.4 billion
Total number of
mutual funds1,126 2,027
Total number of mutual
funds eligible for MRFAbout 100 About 850
Number of mutual funds applied for distribution
35 China-domiciled funds have received approval for distribution in Hong Kong
6 Hong Kong-domiciled funds have received approval for distribution in China
China-Hong Kong Mutual Recognition of Funds ("MRF")
PwC 41
China-Hong Kong Mutual Recognition of Funds ("MRF")
SFC requirements for entry to Hong Kong
CSRC requirements for entry to mainland China
Domiciled on the Mainland Domiciled in Hong Kong
Fund registered with CSRC Fund registered with SFC
Established and authorised for over one year
Established and authorised for over one year
Fund size not less than RMB200 million
Fund size not less than RMB200 million
Less than 20% of assets in Hong Kong Less than 20% of assets in Mainland
Distribution to Hong Kong investors doesn’t exceed 50% of total assets
Distribution to Mainland investors doesn’t exceed 50% of total assets
Investment management function remains on Mainland
Investment management function remains in Hong Kong
Must appoint a Hong Kong representative
Must appoint a Mainland agent
PwC 42
Degree of similarity
Low
Similar
Identical
Limited additional requirements
for hosting
Set up in Home prior
to HostUCITS III –
Host registration
Management Company =
Operator
Independent depository/
operator
Fair value principles
Custody of assets by Trustee/
operator and not “depository”
Single entity risk 15% v/s 10%
Delegation limitations
Reporting obligations
Sec lending 50% v/s 100%
NAV calculationby Operator
Synthetic short-selling through
derivatives
Depository responsible for
delegation
Physical short-selling banned
ARFP -UCITS comparison
PwC 43
Region Country Typical Offshore Fund Legal Structure Market Access
Developed Asia
Singapore SICAV Direct
Hong Kong SICAV Direct
Japan FCP / SICAV Direct
Australia Fund of funds + Master Feeder funds Indirect
Developing Asia
Taiwan SICAV Direct
KoreaOnshore feeder funds and wrappers, fund of funds & master-feeder funds
Direct and Indirect
Emerging Asia
China QDII and Direct via HK-China Mutual Fund Recognition
India Closed
MalaysiaOnshore feeder funds and wrappers, fund of funds & master-feeder funds
Direct via the ASEAN CIS Regime
Thailand
Indonesia Closed
Reality check!Still no uniform access for offshore funds in Asia
PwC 44
Reality check!State of readiness…
Source: PwC research / European Asset Management Conference 2015
CurrentSize
GrowthPotential Opportunity Market
Access Tax issue? Method of Entry
AU Large Moderate Retail & Inst. Low Yes Onshore
SG Small Low Retail &HNWI High No On/
Offshore
PH Small Low Retail Low Yes Onshore
TH Small Moderate Retail & Inst. Low Yes Onshore
NZ Small Low Retail Low Yes Onshore
KR Medium Moderate Retail & Inst. Low Yes Onshore
HK Medium High Retail & HNWI High No On/Offshore
TW Medium High Retail & Inst. Moderate to High No Offshore
CH Large High Retail Low to Moderate Yes Onshore
MY Small Moderate Retail & Inst. Low to Moderate Yes Onshore
JP Large Moderate Retail & Inst. Moderate to High No On/
Offshore
PwC 45
Lots of reasons to be excited
Wealth is growing in Asia, and the upside for fund penetration is attractive
Significant investments in infrastructure, real estate and other assets will need to be made
Economic integration in Asia is becoming a reality
Can you afford not be invested in Asia?
www.irishfunds.ie
Outsourcing Risk Management:Insights on the latest MAS Guidance
• Ms. Philippa Allen, CEO, ComplianceAsia Consulting Ltd
Moderator
Panelists
• Mr. Scott McLaren, Head of Hong Kong, Brown Brothers Harriman
• Ms. Michelle Lloyd, Head of Irish Asia Desk, Maples and Calder
• Mr. Ken Forbes, Head of Asia Operations, Henderson Global Investors
www.irishfunds.ie
Mr. Tony Riha
Asia Representative, Irish Funds
Closing Comments
www.irishfunds.ie4848 www.irishfunds.ie18 August 2016
Irish Funds Singapore Seminar 2016
Hosted by:
Disclaimer: The material contained in this document is for marketing, general information and
reference purposes only and is not intended to provide legal, tax, accounting, investment,
financial or other professional advice on any matter, and is not to be used as such. Further,
this document is not intended to be, and should not be taken as, a definitive statement of
either industry views or operational practice.
The contents of this document may not be comprehensive or up-to-date, and neither Irish
Funds, nor any of its member firms, shall be responsible for updating any information
contained within this document.
